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The persistence of labor abuse indicates the complexity of the problem and its resistance to many of the solutions currently in place. In a new report published in Deloitte Review, the authors consider current and emerging solutions to this global challenge and suggest that organizations focus on taking incremental steps that improve the status quo without losing sight of the longer-term goal of making workplaces safe, fair and humane.

Rather than making large investments with the hope of eliminating risk, companies can make supply chains more resilient to the infinite number of risks that may become realities by making targeted investments in areas that proactively mitigate risk, such as enhancing visibility and collaborating with suppliers.

It is tempting to dismiss the maker movement as a fad. However, companies would be well served to find ways to participate, learn and perhaps shape the movement. While the movement will bring disruption, it also will provide opportunities to boost sensing capabilities, leverage platforms for R&D and reimagine the enterprise as a platform.

Deloitte Views & Analysis

Non-U.S. companies pursuing cross-border M&A or otherwise investing in the U.S. face many decisions as they consider when, where and how to do so, as well as potential regulatory hurdles. Whether to acquire or go greenfield, how a U.S. investment might support the global growth strategy and what brand issues an investment might present are just a few questions CFOs and other C-suite executives should consider as they begin identifying potential targets for investment and possible challenges.

Tax considerations can be among the most important issues for non-U.S. companies pursuing cross-border M&A or direct investments in the U.S. Beth Mueller, a partner at Deloitte Tax LLP and U.S. Inbound Services leader, discusses ways to approach some of the critical tax considerations highlighted in the report, "Branching Out: 10 Questions for Inbound U.S. Investors," and issues CFOs should address with their tax directors when evaluating and planning an inbound investment.

As the likelihood of encountering IFRS with respect to a potential target increases, it’s important for CFOs of acquisitive companies to understand the differences between IFRS and U.S. GAAP and the potential impact on deal structuring and modeling. Differing local country or company interpretations of IFRS may result in challenges related to benchmarking and valuation multiples as well as increased disputes over purchase price adjustments and earn-out targets.

Supply Chain Risk: Answers to Five Often-asked Questions

The ripple effects of supply chain risks are being felt around the world as problems that used to be isolated and manageable can now lead to global supply disruptions and lasting brand damage. Supply chain executives have to be equally vigilant about internal operational risks and even functional support risks in areas such as finance, legal, HR and IT.

As executives find themselves being asked more and more questions about the risks facing their supply chains, many have decided it’s time to reexamine their assumptions and approaches. Below Kelly Marchese, principal, Deloitte Consulting LLP, answers five of the questions she hears most frequently regarding supply chain risk.

Q: Why is supply chain risk something companies and their executives should be worrying about now?

Kelly Marchese: Supply chains today are more vulnerable than ever and the potential business impact has never been more multifaceted. Globalization is one reason for this, boosting supply chain complexity and magnifying the impact of disruptions by exponentially increasing the number of individuals, organizations and operations that can affect a product’s supply chain. Increased reliance on an extended value chain is another key factor. Today, it is virtually impossible to have a direct “line of sight” and drive accountability for risk across the entire supply chain. And social media adds an entirely new challenge by instantly shining a global spotlight on even the smallest, most isolated problems—giving companies no place to hide.

Q: Many companies have already spent a lot of time and money on supply chain improvements. What more can they do?

Kelly Marchese: Ironically, traditional efficiency improvements have actually increased supply chain risk by focusing on cost reduction without an accompanying evaluation of the vulnerabilities it can expose. No matter how efficient a company’s operations might be, supply chain risk is a critical issue that needs to be addressed. The first step is to understand the most critical vulnerabilities. The second step is to identify who owns those vulnerabilities. In many cases, responsibility rests with more than one person or organization.

Q. For companies that have mostly used external suppliers, isn’t supply chain risk the suppliers’ responsibility?

Kelly Marchese: According to The Ripple Effect, a recent survey conducted by Deloitte Consulting LLP, 63% of executives see external suppliers as one of the biggest sources of today’s supply chain concerns. And when problems do arise, it’s the company—not suppliers—that will likely bear the brunt of the blame. What’s more, even having a diversified portfolio of suppliers is no guarantee. For example, when Japan was hit by a tsunami in 2011, most companies thought their supply chains were safe because they had multiple suppliers as backups. As it turned out, many of those suppliers relied on the same secondary suppliers, causing the entire supply pyramid to collapse.

Q: How can supply chain risk be eliminated if the future can’t be predicted?

Kelly Marchese: It can’t. Although some supply chain risks are readily identifiable and can be effectively mitigated with proper planning, others are impossible to predict and avoid. No company has the infinite resources necessary to address every possible risk. Your best bet is to create a resilient supply chain that can: one, react quickly enough to sidestep emerging problems or take advantage of market opportunities, two, absorb a hard hit without shutting down completely and three, bounce back quickly from even the biggest, most widespread disruptions.

Q: Resiliency sounds like a good idea. Where does one start?

Kelly Marchese: There are four key pillars of supply chain resiliency. The first is visibility, having the ability to track and monitor supply chain events and patterns as they happen—or even before they happen. The second pillar is flexibility, that is, instilling an organizational mindset and expectation that the company can react to problems quickly and find workable solutions without significantly increasing operational costs. Collaboration is the third pillar and that means working with critical supply chain partners through symbiotic, trust-based relationships to avoid disruptions and achieve common goals. The fourth pillar is control. That requires defining the governance structure, policies and mechanisms for monitoring risk that help make it second nature to follow proper procedures and processes when the need inevitably arises.

It isn’t possible to identify and address every conceivable risk, so concentrate on the most critical vulnerabilities that are especially important to your business. Resiliency can be the difference between surviving and thriving in a world of increasingly complex supply chain risk. But it requires a new mindset and new capabilities across the entire supply chain. This kind of fundamental change doesn’t happen overnight.

A Closer Look: Supply Chain Risk in the Food IndustryCommentary from James Cascone, principal, Deloitte & Touche LLP and leader of the Center for the Global Food Value Chain

Today’s food value chain perfectly illustrates the need for resiliency. In the past, most food companies dealt with supply chain risk after the fact through product recalls—and by switching suppliers once problems were detected. In an increasingly complex marketplace, the traditional approach just isn’t good enough.

Tracing a food problem back to its source is complicated by multi-tiered supply networks and divergent standards for food quality and safety around the world. For example, various countries that produce rice allow different levels of arsenic (which is used to control pests). This means that rice may be deemed safe and legal to sell in one market but not in others.

Regulations and standards are continually evolving and present a challenging risk. In the U.S., for instance, federal lawmakers are expanding the authority of the Food and Drug Administration to include the ability to shut down operations that fail to comply with the law. Food companies may soon face the real risk of being put out of business, as opposed to simply conducting a recall, which many food companies were willing to live with as a cost of doing business.

A more challenging risk is food fraud and economic adulteration. Effective risk management in this context requires more than a general understanding of supply chain risks or the ability to change suppliers. It requires an in-depth scientific knowledge of ingredients, packaging and manufacturing processes that drive food quality and safety. Verification of foreign suppliers, including an assessment of their food defense measures, is an essential mitigation strategy that protects consumers and the bottom line.

When assessing supply chain risk, regardless of the industry, lack of transparency to Tier N suppliers may produce sub-optimal results without in-country business intelligence services and traceability solutions. Even though commodities may appear undifferentiated, quality ingredients are not easily replaceable and sourcing from qualified suppliers can be a challenge. It’s also worth remembering that eliminating supply chain risk isn’t an achievable goal. Instead, target resiliency. With greater resiliency, the supply chain is better able to respond quickly to risks as they present themselves, absorb unexpected hits and minimize financial and operational impacts to your business.